From an Export-led to an Import-substituting Economy: Chile 1914–39

Abstract

It is commonly argued that the process of industrialisation began in Chile only in the 1930s. Attention is drawn to a ‘frustrated’ attempt at industrialisation between 1830 and 1960 due to its ‘incompatibility’ with export-led growth, and hence it is held that local manufacturing industry could only flourish after the collapse of the export sector.¹ Chile thus fits neatly into the conventional model which at its simplest divides post-colonial economic development in Latin America into two major phases, ‘outward-oriented’ growth up to 1930 and ‘inward-oriented’ growth thereafter.² This assumes that in the first phase the export sector acts as the engine of growth, but generates little diversification throughout the rest of the economy, and in particular into manufacturing, while in the second phase a process of import-substitution is launched, and the State takes an active role in promoting local economic development.

Earlier versions of this chapter were written for two conferences organised by Rosemary Thorp on the effect of the 1929 Depression on the Latin American economies (Oxford 1981 and Manchester 1982). I would like to thank the participants of both conferences for their comments and contributions to the chapter, in particular Marcelo Abreu, Paul Cammack, Carlos Diaz Alejandro, Charles Kindleberger, Brooke Larson, Oscar Muñoz, José Antonio Ocampo and Rosemary Thorp. I am also grateful to Luis Ortega, John Sender, Ignes Sodre and Elizabeth Spillius for their contributions to the finished chapter. A grant from the Social Science Research Council (New York) made this research possible. Responsibility for the judgements expressed is mine alone.